Unfortunately, all of this is hindsight. Why wasn't any of this in your prep?
Ghost of If You Can Draw A Straight Line
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Unfortunately, all of this is hindsight. Why wasn't any of this in your prep?
I will spend some time reviewing your post on using a journal effectively this weekend. I've been trying to give myself the least amount of things to think about before the day begins; the location of the mean, the upper channel, the longer-term DL and the LOLR.
As for it being hindsight - the lines were on my chart (minus the tiny one at the end). I fanned the DL once the new high was put in. I also adjusted the upper wedge line. All the other stuff I mentioned was about today's price action so that couldn't have made it into my prep. I will try to expand my prep to more than I have been including and start collecting better data so I can see what is and isn't working better.
The only chart you posted to your journal was a macro chart, and although the macro is necessary, it hasn't changed in weeks. There's no point in doing it over and over.
As far as today's action, that began setting up at midnight. It then resolved itself with the jobs report which in turn segued into a trading range by 0900. All of this was available to you long before the open. Perhaps you don't understand its importance, but surely today illustrates the character of a mean-reverting market.
There is also the possibility that you're listening to too many voices. If so, I suggest you pick one, investigate and test it, then move on to another rather than listen to all of them simultaneously.
I post the macro view because I didn't see anything in the overnight action that gave me any clarity. I've included two views of what I was trying to make sense of. I see that we were rotating around 3500 yesterday but where we were at the open looked like the middle of nowhere. I couldn't make heads or tails of yesterday's PA - after 95 was supported it looked like buyers had the ball in their court but I had no confidence in the direction.
As for today - somewhere after skull island I drew the channel in the third chart and took a decent long off of it. Today the mean had direction and the rising bottoms made enough sense out of it all for me to see it. I thought I was starting to understand mean reversion but am feeling more doubtful. There is the hourly mean which doesn't match the daily although they are drawn from the same swings, then you have these micro channels that can last a few swings or a few days. I guess this lack of clarity has me zoom out until I have something simple to lean on.
As for voices - I'm listening to yours and the few in my own head. I can't make heads or tails of what Ammo is posting in my journal but it's harmless so I leave it alone. I'm sure there is some junk in there from things I picked up before but I'm not intentionally hanging on. I'm glad I have a few days to think more about this.
Rather than dwell on this, I suggest that you think about what you missed, what you could have done in order to see it ahead of time, and what you can do next time to avoid missing it again (in a mean-reverting market, this will occur again and again).
This was all about the mean and traders' efforts to pull price away from the mean. At least that was the case until 1300. Anyone not seeing that would be stopped out again and again. That's the nature of it. If you're thinking about channels and lines and so forth instead, then perhaps you need a reset.
This was all about the mean and traders' efforts to pull price away from the mean. At least that was the case until 1300. Anyone not seeing that would be stopped out again and again. That's the nature of it. If you're thinking about channels and lines and so forth instead, then perhaps you need a reset.
That's a very powerful visual. Thank you for that.
This question was asked in eminiman's journal but has been asked in other forms by other people, and given what I've been reading in reviews of yesterday's session, it seems that further explanation of the chart I posted (below) is needed.
The "gorilla", of course, is the mean. And that was drawn before the session even started. When I opened things up yesterday morning, the first thing I looked for was what traders had been doing all night (there are those who insist that what happens over night is "noise", that it needn't even be charted) and if there were any levels beyond which they would not or could not go. I noticed first that they had been in a range from 3493 to 3500 all night long. This was broken to the upside when the jobs report came out, then traders settled into another range from 3514 to 3512 after first reaching 3516. The mean of this range was 3513. The mean of the downmove from the high was 3514, which was also the upper limit of the range from 0900 to 0930. Mid-court then became 3614, possibly 3616, to 3512. But when the ball was tossed into the air at the open, the swings were fast and wide. Yes, one could trade these, or try to. I didn't even bother. If someone else makes a different choice, that's his to make. I wanted a clearer idea of what traders had in mind.
So I let traders create the opening range. Once they did, and the midpoint of that range matched up with the mean suggested before the open, this pretty much told me all I needed to know about the rest of the morning session, and many trades that I might have made under other circumstances were not even considered (see, for example, the chart for Tuesday), especially since traders spent 10m hugging the mean after the dust had settled. I did try going long when price departed from this range, but that didn't go anywhere, so I let it drop back toward the mean. I didn't try any other trade until after price reached 3533, but the short never triggered and I tried again at the double top ("skull island"). This was all right, but instead of returning to the mean, it bounced off the top of the range. Price did make another double top at 1130 and a clean move to the mean 20m later. But then it was lunch and I was done.
The point of which is to provide at least one example of how the SLA and AMT work together. Without one or the other, much less both, I would have made many more trades and probably lost a lot more money. As it was, I made only a few and had no losses. Not that all the gains were fabulous. But they weren't losses. Could someone else have done better? Undoubtedly. But this is not a one-day affair. This is "grinding it out", day after day, year after year. The hot-dogging may impress the audience, but it eventually wears one down.
Since some of you are now more interested in prep, I also want to make the point that while the template that eminiman wrote may have taken him a half hour or hour or maybe more to write, and 5 or 10 or many more minutes for interested traders to read and study, it takes maybe two or three minutes to do all this in the morning before the session begins. If there's nothing remarkable, as there was yesterday morning, it need take no more than seconds: what are traders doing, where are they doing it, why are they doing it there?
There is of course the temptation to turn to complicated software and elaborate charts in order to "master" this approach. But shortcuts won't help. True masters needn't even bother with charts, so thinking that a fancier program or platform or display is going to do it for you merely postpones the inevitable. If the trader can't distinguish between up and down and if he can't tell from price movement whether the pressure is on the buyside or the sellside, he won't be retiring anytime soon on his trading revenue, whether he uses charts or a T&S display or radio signals from Mars.
The work has to be done. The prep has to be done. If these are done thoroughly and IF the trader has accepted the fact that not every trade is going to be a winner, he will find that whatever emotional baggage he brought to the party gets left behind, and he can begin to trade methodically, deliberately, rationally, without bouncing around -- or being bounced around -- like a handball.
So if we used SLA and the ticker observing changes in supply and demand, price rejections, hesitations etc as the what, AMT as the where, what do we do about the why? Or what is the why? As soon as I start thinking about the why that's where I get screwed up.
Is it something like price rejected the LL of a TC because sellers found buyers that were interested and if the rejection is rapid would that convey a strong buying interest at the prices around the LL of the TC? Then that rejection "breaks the SL" furthering our seeing of the shift in selling to buying pressure?
Is it something like price rejected the LL of a TC because sellers found buyers that were interested and if the rejection is rapid would that convey a strong buying interest at the prices around the LL of the TC? Then that rejection "breaks the SL" furthering our seeing of the shift in selling to buying pressure?
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